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  CNN    Your Money    News/Business. A break down the  
   financial news of the week. New.  

    April 13, 2013
    10:00 - 11:00am PDT  

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gun ownership but say reform is needed. and at 3:00 eastern, the story of jackie robinson hits the big screen this weekend in "42." i'll talk to another african-american baseball legend weighing in on the impact robinson had. next, another record-setting week for stocks. the housing market is rebounding, so why is president obama still receiving low marks for his handling of the economy? kristin romans h christine rome. "your money next." >> the sky isn't falling, not yet anyway. if the worst is over in washington, is now the time when president obama steps in and shapes his legacy? this is "your money." to start the country needs a blueprint. like any country, this business needs a budget. president obama insists one republicans can work with.
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>> for years the debate in this town has raged between chrreduc deficits at all costs and making investments necessary to grow our economy. this budget answers that argument because we can do both. >> gore yegloria, crunch time f obama and washington. good morning, gloria. you write president obama now has a chance to act on his to-do list, which you say could set his legacy for the second term. movement on gun control, real immigration reform and for the first time a new federal budget. we'll break down the president's budget proposal later in the show but let's say an agreement on federal budget and immigration reform could change america's economic landscape. why do you think now is crunch time for this president and his agenda? >> because he's in the second term and the window starts to close after about 18 months in. this is a president who didn't think he was going to have to
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deal with gun control but after newtown it became a priority item. immigration, of course, is a priority for both republicans and democrats. and on the budget, and i don't want to be pollyanna about this, but on the budget there may be an opportunity to do something short of a grand bargain because what you saw from the president was some movement, you know, putting entitlements, medicare, social security on the table. not enough for republicans because the president also wants more revenue. but he has started reaching out a little bit and so you can see that this is kind of a different president who understands in this term he has this window where he's actually got to get some things done. >> will is a cnn contributor, critical of the president's outreach or lack of to republicans on the hill. the president had dinner with a group of republicans. by all accounts it went pretty well. georgia governor was in charge of the gop guest list.
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>> the bulk of the conversation was driven by members the president allowed to come. most of the conversation was about debt, deficit, growing national debt, fiscal, and entitlements. it was free-lowing exchange of ideas from both sides. >> will, meaningful discussion. are you seeing signs of sincere compromise from this president? >> what does compromise mean? >> putting social security on the table. >> oh, does that satisfy? i thought it meant giving back, coming to proposals. the only matter that matters in the budget proposal is the number he'll spend next year. projections ten years out need to be taken with more than a grain of salt. four budget proposals put outside of congress. one from senator rand, one from paul ryan, one from democratic
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senator patty murray and one from president obama. look where his numbers come in, the most expensive. . the four plans. it seems like a compromise might come in here, cheaper than murray. senator murray plan. how do you put out the most expensive proposal and call that a compromise? >> it's a starting point for discussion. >> put entitlements on the table. this recognizes the reality. recognizing entitlements need to be reformed, not tweaked, reformed is a recognition of reality. it's not a compromise on our further. >> let me bring in economic policy wroert for "the new york times," annie lowry. we've been talking on this program, stocks on a tear, housing coming back, partly because of investors buying up property, but job recovery has been slow, stubbornly slow. this is why only 44% of americans approve of president obama's handling. what does the president need to do to convince americans he can
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get the economy going for those that are not feeling richer, despite one record stock market, one after another? >> it's an interesting thing. we had retail sales numbers coming in very weak. it seems like that had to do with the payroll tax cut expiring in january. despite all the good things going on in the economy, housing turning around, for instance, the jobless rate is going down, it's all going really, really slowly. i think americans feel this. and i think the numbers are still really bad. that's reflected in the relatively low approval of the president from now and again. there isn't a ton the white house can do to shift that. these are really big economic trends. this budget is probably not going to pass. the other budgets, it's not clear how they're going to deal with the sequester, if they'll deal with it at all. we're in this continued slog, even if the economy is picking up a little bit. >> what does this budget -- the president's budget tell you? you heard will's criticism saying it's not really a compromise. $3.77 trillion budget, if enacted as is, it would be a first step toward stabilizing
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debt and deficits, isn't it? >> yeah, it is. it's worth noting there's already been a tremendous amount of debt and deficit reduction performed by this congress, including the sequester. that's $1 trillion over ten years. i think both sides want to move the budget into closer balance. the question is, how quickly to do that, given the economy remains really, really weak, even if it's still getting better. the numbers are not great. >> gloria -- >> i just want to point out to will, you know, to his earlier point about how the president didn't really put enough on social security on the table. the republicans are divided on this, too. i watched a senior republican say to wolf blitzer the other day that, oh, my god, this president is really taking seniors on. and he shouldn't do this. and he's trying to -- >> well, everybody understands how to demagogue. >> then i saw the house speaker take on that republican and say, i don't agree with him. so, not only do you have splits in the democratic party on what you ought to do on entitlements but you have splits in the
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republican party because there are clearly some republicans who are really ready to use this against the president as a political issue, even given, as you point out, sort of the pausety of what he did put on the table. >> that's all fair, gloria. it's no news both sides in the political spectrum know how to demagogue an issue. >> right. >> whether or not this particular budget is a real and sincere move toward deficit deduction seems to be undercut by $1.2 trillion in sequester cuts, president obama would like to repeal those cuts. his $1.8 trillion would be offset by him cutting back the sequester cuts. doesn't seem like anything sincere as a bargain for taxes. >> annie pointed out, minus chance -- minus infinity as john berman pointed out, this budget will get enacted, right? >> right. the real questions, are they going to cut some smaller deal on entitlement reform and are they going to do anything about the sequester and will they
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start a tax reform refopolicy t will take years once they start it. i think there will be movings to replace the sequester cuts. some are bad. some prevents medicare patients with cancer from getting treatment. i think there might be movement there. but i don't think you'll see a bigger repeal because it's hard to find that much money. >> gloria, you know -- go ahead. >> all of this has to be seen in the context of everything else that's going on that we spoke about earlier. so, you have immigration reform. if some kind of deal can be cut with some -- you know, a group of republicans, a group of democrats, that may set the tone for something else on deficit reduction. if the same thing happens in the smaller version on guns, for example, so these are shifting coalitions. right now everybody's looking toward 2014 and what will work for them. but i think you have to look this -- look at this in kind of a larger picture about what else is going to be going on on capitol hill. >> to put a button on this, if i
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could, the larger picture is, do small things. it's the message over and over. obama care proved how problematic big things can be. immigration reform, comprehensive immigration reform, is proving that again. and on gun control, something i disagree with, is small, you might be able to go something done. >> nice to see all of you. have a wonderful weekend. coming up, praise for the president from paul ryan? >> does deserve credit for challenging his party on entitlements. >> could the president be making new friends as he loses old ones on the left? we've reduced taxes and lowered costs to save businesses more than two billion dollars to grow jobs, cut middle class income taxes to the lowest rate in sixty years, and we're creating tax free zones for business startups. the new new york is working creating tens of thousands of new businesses, and we're just getting started. to grow or start your business visit thenewny.com
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lookin' good, flo! feelin' good! feelin' real good! [ engine revs ] boat protection people love. now, that's progressive. call or click today. president obama revealed his 2014 bij this week. the $3.77 trillion proposal would cut deficits by $1.8 trillion over the next decade. it's two months late and no one expects it to pass in congress, it's a very important marker for the president's continuing debt talks with lawmakers. his budget includes some new spending and priorities the president thinks are important. spending on infrastructure, for example, $50 billion worth.
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universal pre-k education for all children in america. and tax hikes that target the rich. a 30% tax rate on those making more than 1 million bucks a year as well as new rules. also a minimum wage increase and a cap on itemized deductions and exclusion for high-income households. he also surprised some by handing republicans a good deal of entitlement reform. a change in the cpi, or how the government measures inflation, would reduce projected federal spending by slowing the growth of federal benefits adjusted for cost of living. that includes social security. the adjustment would save the government about $130 billion over the next decade but many, even his own party say, it unfairly targets seniors. >> i myself believe that whatever we talk about in terms of prolonging life of social security should be considered in its own place. whatever we're doing, it's about extending the life and the
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strength of social security. it's not about balancing the budget. and so that's some of the concerns that some of our members have, why is this in this bill? >> as part of his proposal to replace the forced government spending cuts that went into effect earlier this year, another $400 billion for medicare and other federal health programs would be cut as well. i'm joaned by senior writer at cnnmoney.com and editorial writer at wall street journal. steven, president obama handed down significant entitlement changes. you actually agree with the president on this. he's moving in your direction. is it enough? >> you know, the only thing i take issue with you is when you say significant. i don't think these are really very substantial cuts. >> so, it's not enough? >> it's not enough. >> that's what you say. >> but i will say this, i do think the president's budget is pretty dead on arrival but i also think there's -- raised a lot of eyebrows on both sides of the aisle in washington. the president opened up this
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pandora's box of talking about social security reforms. i'm all for it. i think the program is really broken. i think these long-term liabilities are a big, big problem. and congratulations to the president for really taking the entitlement problem serious. >> that's why progressives are spitting nail this is week because they don't want a democratic president to be the one putting entitlement changes into a budget proposal. >> yeah, they don't want any of that going on, ever it seems. but also there were some republicans who said, he's attacking seniors. i mean, they are going to demagogue. i know will was talking about that before. everyone is focusing on the spending side of chain cpi. it will also raise revenue because it will change how pieces of the tax code are adjusted. it will go up less under chain cpi. i haven't heard many republicans pipe up about that yet but i'm sure they will. >> just the politics of the chain cpi. i can't say i'm believing the chain cpi are fascinating but
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they are fascinating, nancy. they really, really are. it's wonky meets politics. no one expects this to fully pass but they have a chance to pass one by monday or they lose all or part of their paychecks. what do you think happens next? >> two tracks of things that could happen. one is we could wait and see if the house and senate could reconcile their budgets. i think the likelihood seems very low at this point. the other track to watch is the president has been reaching out to all these different republicans and having -- he's had two dinners now with 12 different republican senators each time. and one of the things the white house is doing is hoping they can pick off some republican senators and come up with some sort of budget deal this spring ahead of the debt ceiling. >> the debt ceiling, that even -- that makes me nervous. i'm twitching when i heard the words debt ceiling. stephen, do we think there's any more chance they're moving to at least some kinds of consensus of how we'll run the nation's books
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before we get to the debt ceiling? >> i'm not sure we are, actually. i think this budget was an ideological document -- >> aren't they all? wait, isn't that what it is, the president's mission statement, right? >> of course it is. no doubt about it. this is the president's statement. i worked for ronald reagan when we put our budgets. it's a statement of principle. the point i'm making is there's not a lot in here republicans are going to go say, oh, wonderful idea. we haven't talked about the new taxes which republicans will reject out of hand. the most interesting thing that happened this week when the president proposed what i think is a fairly modest change to social security, oh, my gosh, these organizations on the left, i mean, had cardiac arrest. and that makes me somewhat nervous about whether we're ever going to get serious about these big entitlements. we talk -- >> they have options -- >> all the money is in entitlements. we can't even do this baby step, baby step. >> they had cardiac arrest.
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they gave other options. for example, it was either krugman or robert reich said raise the age, raise the cap, raise other things but don't -- don't shrink the size of the check. they didn't just have cardiac arrest and not give other options. >> all they ever want to do is raise taxes. raise taxes, raise taxes. by the way, i'm in favor of raising the retirement age for these programs. when we started out these programs, people's life expectancy was much, much lower than it is today. so, we've got to get serious about these proposals. my only point s my goodness, if this little tiny cut is seen as armageddon, how are we going to make the really, really big decisions we all know need to be made on medicaid, medicare and social security. >> i know you want to jump in. >> it's interesting, obama when he campaigned for president in 2008 was calling for higher payroll taxes on the wealthy. he didn't do that in his budget. he did something republicans want. from the republican side, for them -- for anybody to complain
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on the republican side that, hey, he hasn't taken a step forward, it's not a huge step forward, i know, butt it's a step forward. >> nancy, the last word on the budget. >> i mean, i think that republicans on capitol hill this week, i was up there a lot, they do, i think -- they were heartened by the idea that the president was willing to make cuts to social security. and just to stephen's point, there are a bunch of concessions in the budget. you know, there's the social security cuts. the president undid a lot of the sequester cuts to defense. and he's interested in doing corporate tax reform, which is something the republicans want. yes, maybe it doesn't go far enough in terms of reforming medicare but he has stepped forward on a number of things. >> budget, gun control, immigration, go down the line and still jobless recovery, so a lot of work to do. nice to see you all. have a great weekend. since the end of the recession the economy has created almost 5 million jobs. majority of those pogs are for low-wage workers. after the break, we'll look at the growing divide between america's two economies. [ indistinct shouting ]
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one america, two economies. the stock market shatters all-time records, corporate profits go through the roof, mild class americans are getting squeezed. real median economy still climbs during this recovery. still lower than the 1999 peak. in that period total economic output has expanded by 24%. that means are you creating more and you're getting paid less. jobs have been coming back since the recession officially ended, but the majority of those jobs are low wage, part-time jobs. at same time, more and more people are dropping out of the job market, labor force participation, people looking for work, has hit lows not seen in decades. i recently sa down with wilbur ross, an investor who understands how the economy works. he's made billions in investing in failed industries and turning them around. i asked him if he thought there
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were two americas. >> there are really three americas. you have those more or less permanently on welfare, just not employed. something like 37% of working-age americans neither have a job nor want one. they're apparently comfortable with the system the way that it is. that's one segment. then you have the segment in between that wants and needs a job. and there i think the biggest problem is that our educational system has been failing them. and unless we fix the educational system, we're not going to solve the problem of those people in between. >> i want to bring in ken rogoff, former chief economist at imf. two economies, three economies, four, five economies. it's clear the economy is not working for a big chunk of people. what's going wrong? >> well, there are many dimensions, globalization and some of our jobs are being replaced by people in asia and other places.
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eventually robots. we also have the financial crisis, which has left a lot of our youth unemployed. a lot of people have trouble getting into the labor force and they're going to be hurt for a long time. and on the other end of it, certainly what wilbur said about the rich getting very rich. that's really split people up. he mentioned the education system. absolutely we have to work on that. >> is he right about that 37%, that we have such a great safety net in america, that 37% of people are not engaged in the economy and that's all right? >> i don't want to go there, but obviously what it means to be poor in the united states is different than being in india. it's -- but i think the vast majority of people are still quite aspirational and would like a ladder up if offered one. >> that's the troubling thing. when you have this middle that wants to get on that ladder and the ladder keeps way from them. >> it has been a really rough period. like i said, especially for people, the unemployed, there are a lot of people who have been unemployed for a long time,
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a big chunk. and they lose ability to ramp back onto the labor force. that's a huge, long-run cost out of this whole financial crisis that worries me for the future. >> it's interesting, you know, he was -- wilbur ross was a supporter of mitt romney, but no matter who you talk to on the left, right, middle, no matter your political affiliation, everyone agrees education is such an important tool. an equalizer as we go forward here. >>, yeah i mean, education's not going to propel us ahead of asia and europe because they're saying the same thing, but education's become unequal for a number of reasons. public school education has deteriorated in a lot of places. college education, there's less equal access. certainly this idea that everybody could be the same, you start out the same, that's a key to it, the education system. >> ken, nice to see you. >> thank you so much. >> talk to you very, very soon. president obama promised to create a million manufacturing jobs in four years but last month we actually lost manufacturing jobs. what happens to u.s. workers if
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welcome back. manufacturing once supported the mild class but not anymore. the sector has been hit hard over the last decade. now increasing productivity, falling energy prices and rising wages overseas was supposed to power a recovery. so far the manufacturing comeback has been a flop. >> we can help big factories and small businesses double their exports. and create a million new manufacturing jobs over the next four years. you can make that happen. >> a bold promise during the campaign. now facing the reality of an industry that's been in decline for decades. the u.s. shed 40% of its manufacturing jobs between 1980 and 2010. they're coming back but not fast enough to keep pace with the president's promise. to create 1 million new manufacturing jobs in the president's second term, the economy should have created 42,000 jobs by now. it's less than half of that. while the rest of the world is
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buying more products made in the usa, it's not even close to what america is buying from abroad. so, is the manufacturing renaissance any more than a manufactured promise? >> scott paul is the president of the alliance for american manufacturing, richard florida senior editor at "the lantic" and professor at university of toronto and nyu. thank you for coming by. the trend in manufacturing jobs has not been good. the economy just lost another 3,000 manufacturing jobs last month. even so, scott, you say you think the president can make that goal of creating 1 million new manufacturing jobs in four years. why are you so optimistic? >> i think it's possible. i think it's an economic imperative to do it, to rebuild the middle class. first, there's the business cycle. i think that we should be seeing an upswing with housing starts. there's a lot of folks who need to buy automobiles, who have been putting that off for a long time. what we don't know about is europe and asia and how strong
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growth potential there is going to be. the other thing are these underlying factors. we do see energy costs quite low for manufacturers in the united states because of the natural gas and oil boom here. we could expect that trend to continue. we can also expect to see rising wages overseas. that makes u.s. manufacturing look a lot more competitive. what we don't know about is public policy. and i firmly believe that we need the right public policies, both internally and then with our trade policies, to achieve that 1 million jobs goal. i think we can get it done. i think there's public support for it. and i do think it's an economic imperative we try to grow manufacturing. i don't think it's a guarantee. >> let's bring in richard. the question is, manufacturing might not be driving new job creation, even if you do have more manufacturing returning to u.s. shores. as the u.s. has lost manufacturing jobs, manufacturing output is up. are we going to see a
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manufacturing renaissance but it won't be a manufacturing jobs renaissance? >> i think the u.s. will always be a great manufacturing nation. we are the greatest agricultural nation in the world. we employ less than 1% of our people. we got more productive, we got more efficient, we learned business and managerial methods. manufacturing employs, 10%, 20% of the population. the figure i like is they're less than 6% of the workforce today involved in direct production. those are people directly touching and making products. that's been shrinking for the past several decades. there's no way the president will make his number unless he takes a broad view. manufacturing will remain important. it's just not going to power our economy. what's going to power our economy are two categories of jobs. high-skill knowledge in which 40 million americans work, add 7 million more. the terrible fact the low wage service jobs where more than 60 million americans work and we'll add another 10 million of those.
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i think the president should focus on making bad jobs better or not trying to gain strength in any area that's been declining in jobs. >> let's be clear. when you're hollowing out a middle, a middle used to be powered by those manufacturing jobs and you replace it with jobs that don't even pay enough to send the kid to college, let alone buy a house, that's a real problem for the economy. you could have strong manufacturing but a not strong middle. it's not something people want to hear. >> so, the first thing we have to do is make those bad jobs better. we can't go anywhere with 60 million crappy low-wage service jobs. my dad worked at a factory. he started in 1934. took nine people to make a family wage. he kale back from service in world war ii with the unionization, social compact, product tifs was up, he had great job in the manufacturing. we can dot same thing for service today. the other thing is not every manufacturing job is a good job in america. for every aircraft assem bemer or tool and die maker, we have
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sewing machine operators and others making 10 bucks an hour. just like our economy and our labor market are split, so is our manufacturing labor market. and the jobs we're bringing back, you know, there was a great "new york times" story that said, ge is bringing back jobs home. great. the jobs that were there before paid 30 bucks an hour. the new jobs ge brought back home paid $12 to $20 an hour. we have to drive the wages up there, too. >> let me risk losing out on innovation if we don't have more manufacturing jobs or bring back more? my dad who worked in industry, he says, innovation happens on the factory floor, from a guy on a line who figures out how to do something better. >> it does. have you a slew of management consultants at harvard, m.i.t. and other places saying separating innovation from production was a lousy idea. that you should try to sell -- make things in the market you're trying to sell in. where you're innovating as well.
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where you lose a lot of that potential, when the production goes overseas. so i still think there will be some offshoring. i think there are some folks who think that's pretty much run its course. but onshoring is a trend, not only because -- i mean, companies aren't doing this just to be patriotic. they think they will make money and they realize they have to align industrialization to be globally competitive. i want to go back to what richard said about the quality of manufacturing jobs. here's something, 9 out of 10 manufacturing jobs come with health care benefits. you don't find that in the service sector. by and large, even though there has been some reduction in the wage premium, there still is no comparison for folks who don't have a four-year college degree. it's about the only career path that's going to get you to the american dream, to a middle class job. and also if you locate a factory in a community, you're going to get those service sector jobs. the opposite is never the case. that's why manufacturing is important because it spurs
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economic activity in other parts of the economy, like no other sector can. >> gentlemen, we have to leave it there. i mean, there's so much -- so much we could talk about. we could talk about tech, whether tech companies will change this trend, too. but we have to leave it there. up next, can there be a true recovery in housing without a genuine recovery in the job market? [ male announcer ] need help keeping your digestive balance in sync?
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six years after home prices collapsed in this country, the housing market is back, and back with a vengeance in some parts. especially in hard-hit areas like california, arizona, florida and texas. >> the market does not allow you to even think right now. you walk out and it's gone.
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>> snap is right. because home inventories in those markets have become so tight. that means there aren't a lot of homes on the market. that's because of pent-up demand from home buyers who put up with purchasing until the market bottomed out. the national average for 30-year fixed rate average is less than 3.5%. large investors are also buying up homes and converting them into rental properties and investment vehicles and that's tightening up inventories in troubles markets in places like vegas, phoenix, and atlanta. jennifer westhoven covers money and economy for sister network hln. glad to see you. you're in atlanta. where you are, prices are heating up again. real estate is local but home sellers are finally feeling like maybe they're in the driver's seat for the first time in years. for year. if rates go up another point or so or we see another wave of foreclosures, we could see prices fall again. is the housing recovery real, is
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it solid? >> i will tell you, the realtors here say we're in something they call this mini bubble. so i think they mean that absolutely the prices could come back again. for now, things are so hot because there are so few houses out there, but they're saying even -- once people figure out they'll get a pretty good amount of money for their homes, they're going to start listing. you'll get more supply and prices will level. they're not seeing a crash again. they're saying things are going to level out a little bit more as the market continues to heal. they think it's been so bad that we can't fall back that much further. >> it's interesting because i've been watching the real estate in my neighborhood, and i'm in the tri-state area in new york which has not seen the price rises of the rest of the region. a lot of heat. a lot of talk about what's going on. somebody on my block put on a house, 100 people came to see it, no offers. so there's a lot of window shopping. people are ready to put their toe in the water but still a little scared or might not have
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access to the money. >> realtors say that's part of the change. people got used to staying where they are, that they'll be picky. if they're going to buy a house and make the big change after they're used to sticking it out for a while, that they want everything to be perfect. even though in some ways the seller's in the driver's seat and they're doing better, they have to really clean up. >> i recently talked to a billionaire investor wilbur ross. he made money by buying and fixing troubled companies and now he's a group of large investors buying up troubled homes to convert into rental property pep has advice for others. he says take advantage of low rates and refinance. this is what he told me. >> we're encouraging all of o our -- both real estate and corporate intep entities, borrow as much long-term fixed rate money as you can because these rates won't stick around forever. i think that's the best way for regular people to participate in real estate. take advantage of these very
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cheap mortgage rates. lock it in. >> lock it in. 30-year fixed money at 3.43%. you know, ten years ago, jen, i never thought those words would come out of my mouth. >> let alone they would stick around for so long. he's saying he's a huge investor but for small investors, the news the white house is extending the hart program for another two years, if you are under water, you can still find a way because of this government program to refinance, cut your bills and, you know, even you can take advantage of these low rates. a lot of people haven't been able to capture them. >> you're right. a lot of people still under water are thinking of renovating their kitchens or bathrooms because they aren't going to move because they can't afford to get a new place. jen westhoven, good to talk to you. coming up -- >> when you saw the news of the shooting at newtown, did you think, wow, what we're working on is meaningful? >> it's sort of disheartening. to have the technology, sitting on the shelf and know it would
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have decreased gun violent. >> i'm going to pull the trigger on a new gun that could make firearms safer. i'll tell you why you can't buy one. like this overflowing trashcan. to test it, we brought in the scott family. so what do you smell? beach house and you're looking out over the ocean. some place like, uh, hawaii in like a flower field. take your blindfolds off. aw man! [ screams ] [ laughs ] that smells good. i wouldn't even just put it in the trash, i'd put it in every room. stick it to eliminate odors anywhere. new febreze stick & refresh. breathe happy.
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now, that's progressive. call or click today. all eyes on washington as your political leaders are working on a gun control to increase background checks. behind the scenes entrepreneurs are coming up with their own solutions to try to curb gun violence called smart guns. makers say they're child proof and could prevent future tragedies so why can't you buy one? what if your gun could only be fired by your hand? >> your palm print so only you can fire it. >> reporter: this technology isn't only for james bond. this will not fire for me, will it? nothing. the new jersey institute of technology has spent the last 13 years developing a gun that analyzes a person's grip and only fires for its owner. the goal here is using science,
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technology, to make sure someone who's not supposed to fire this gun is not firing this gun. a child, a criminal, someone who's taken the gun and tried to use it against you. >> or stolen the gun or actually had someone else buy it. >> reporter: a german company takes a different approach. its guns are activated by a watch and unique p.i.n. number. >> it says it's good, ready to fire. >> reporter: ready only if you're wearing the watch. >> if at any point an unauthorized user takes the gun and i try to shoot, it will not fire. >> now i introduced the i.d. tag -- >> reporter: trigger smart uses similar wireless technology what's in electronic toll readers to unlock its guns. >> the chip can be worn in the form of a ring on your finger or a bracelet. now they're starting to impedestrian chips in human in the fatty part of the hand. >> reporter: these technologies aren't expensive but you can't buy any of them in the u.s. lack of demand has kept these guns off the shelves.
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but with guns in the national spotlight, that could soon change. has newtown changed things, you think? >> what newtown changed, i think, is the public appetite for >> sebasten and the others have been to the white house to talk about their work, part of the president's efforts to curb gun violence. you will not find the gun industry pushing for this technology. the national shooting sports foundation says the technology not reliable enough yet and potentially makes guns more dangerous. >> it can encourage them to leave loaded firearms accessible relying on technology that can fail at the most inopportune time. >> the entrepreneurs say smart guns would prevent more headlines like these. >> personalized handguns and personalized technology will save the lives of many people ask and children. >> even if the technology makes it to the sparkt the sports foundation says gun owners are not interested. some of the inventors i spoke
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with say people are scared of personalized weapon won't work in a crisis, but they argue we trust our lives to technology every day, when we get in a car, step in an elevator, so why are we so afraid of technology in guns? according to the bureau of justice statistics more than 200,000 guns are stolen every year. if the guns were personalized the criminals wouldn't be able to use them. smart guns make no mistake are not a silver bullet to end gun violence. they may be a starting point. up next, it is a virtual currency. it was created by an anonymous hacker, and too good to be true run up following the crisis in cyprus. this sounds like a great idea. big coins explained next. 1
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. which would you trust, the euro, the official currency of the eurozone backed by european governments, used by hundreds of millions of people or this, a virtual currency called bit coin created by an anonymous hacker four years ago used for a range of illicit activities in the early days and now gaining kind of a mainstream following after the botched bailout of cyprus for many the answer was this bitcoin. maggie lake is here to explain. what is a bitcoin. >> it is a digital currency but not that easy to understand which may be one of the problems. you can only buy it through a circuit of online exchanges, a few of them, and you can't use a
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credit card to purchase it. it is a little complicated for the average person. everyone is talking about it. everyone is asking about it. so because of that, i went to a bar, of course, to find out exactly how this works. >> i am going to pay with bitcoin. >> you don't have to whip out the wallet to pay for a drink at this bar, midtown manhattan's ever bitcoins are accepted. >>.2885 bitcoins. send payment. >> they began taking bitcoins with the help of this group of early adopters. the owners were quickly won over. >> can you explain how this works? >> you put in the amount in u.s. dollars. you go to your wallet on your phone, your bitcoin wallet and scan the code and press send. we get the joins converted into dollars within minutes for us and you get your drink and -- >> and you get paid. it is one of the few brick and mortar places to accept the payment system. >> they're transferred directly from person to person via the
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net. >> the virtual coins are bought and sold through a limited number of online digital exchanges like mount gox. you can't buy them with a credit card. you do need to link a bank account or cell phone. >> i just heard about this. >> charlie is an investor and the co-founder of exchange bit instant. he admits the currency has a reputation to overcome. >> in the beginning bitcoin was i would say over 80% volume was for illicit activities, drugs, fake i.d.s. >> the boost of popularity came on the heels of the crisis in cyprus where people are little access to traditional banking. some say they would have offered a workable currency alternative. >> you may not want to take your real cash out of a real bank just yet, though. although there are now places in new york city where you can spend bitcoins, there are real concerns about consumer protection. there is a reason that people started putting their money in banks, that you get some sort of -- you have some transparency, recourse, you don't get any of that with this
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new currency. >> no, you don't get a regulator, and there is a reason we have regulators and we're not in the wild west. >> can i pay with bitcoin? >> despite the stomach turning swings, they are concerned they have real benefits for businesses and are here to stay. >> if everyone would use bitcoins, i would love that. i wouldn't have to deal with waiting for a credit card and it would be a smaller processing rate. >> people find a way to pay for a good drink one way or the other but he hopes the payment experiment will raise the currency profile at least in this new york bar. >> let's talk about those stomach churning swings, christine. at the beginning of this year bitcoin was trading at $20. this week it hit $266 before tumbling. mount gox went offline, one of the main exchanges i would say, they handle about 80%, came back online, fell more. it has been very rocky since. clearly this is something that has a lot more volatility than a lot of other currencies that we see. >> we keep seeing headlines about the bitcoin millionaires,
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people early investors in bitcoin. my question is how liquid is it in who is really in this market? how do you get in and get out quickly and with your profit, still seems very, very small and new. >> dubious maybe? there are definitely reasons to be concerned. there are people who are in it. we just heard headlines about the winkle voss twins, very tech savvy people, but what we have to worry about as these headlines have grown and we have seen it rally, i am told by sources that the people trading in this are very sophisticated, some day traders, day traders who lost their job used to trading in emerging markets and very illiquid currencies and understand the system, perhaps understand how to game the system, so you have to be very careful. if you see a headline and you're an ordinary investor and say i can make a million dollars getting in on this, there is no transparency. there is to resource. theres no ctr